Fast food restaurants face some daunting challenges. The catch phrase “would you like fries with that” has become equated with the very definition of a dead-end job. However, just as few kids grow up dreaming about working at McDonalds, probably even fewer harbor ambitions to break into the insurance industry.
Most of us have our favorite fast food horror stories about poor service, improperly prepared food, and unclean premises. However, we’ve also experienced that pleasant surprise when you enter a well-run establishment where everything just seems to click. The fast food industry has responded to their personnel problems with automation, computers, and clocks. They leave nothing to chance. As long as an employee knows which button to push, they can pretty much prepare any item on the menu. And to make sure they’re working efficiently, everything is timed, recorded, reported, and measured against corporate standards. The only thing left to chance is a cheerful attitude and a willingness to work.
This is what makes Chipotle’s approach so refreshingly different. In a March 20, 2014 article in Quartz by Max Nisen titled “How Chipotle Transformed Itself by Upending its Approach to Management” they discuss how “Chipotle favors human skills over rules, robots, and timers. Every employee can work in the kitchen and is expected to adjust the guacamole recipe if a crate of jalapeños is particularly hot”.
This expectation is revealing in a couple of ways. First, it’s indicative of the locally prepared approach that Chipotle applies to their menu. Unlike other fast food chains, their food is prepared from fresh ingredients at each location — no frozen mass-produced packages shipped in bulk from a corporate factory here. The second factor that makes this so unusual is empowering every employee with the expectation and authority to use their own discretion in influencing something as fundamental and important as the flavor of their food. And it’s not just the manager – it’s every employee in the store.
How many of us would consider allowing our agents underwrite their own applications on the fly or empower our CSR’s to deviate from written procedures at their discretion?
In this era of automated underwriting, customer portals, and rules driven processing, Chipotle’s individualized approach to both their products and their people runs contrary to almost every industry norm. How do they do it – and why? Their rationale tracks surprisingly well with those of many innovative life companies.
The critical factor is hiring the right people in the first place and then providing a structure for them to grow and improve. Although this sounds simple and common sense, Chipotle’s process turns the typical fast food model upside down. This new process was the brain-child of co-CEO Monty Moran.
According to Moran, “the problem was we weren’t picking the best people. Why? Well, the best people don’t come from fast food that often to be honest and if they do they’re usually employed. They’re not looking (for a job) if they’re good. We were taking bad people and putting them over managers (who were) good people”.
Moran went on to explain that “we don’t care about experience very much. In fact, I think experience at another fast food restaurant is as likely to be a negative as it is to be a positive. We look for people who possess certain qualities that you can’t teach. You can teach somebody experience, how to hold a knife and prep ingredients or even how to run a restaurant. A less experienced person is more likely to mess up, but when you hire bright people, they catch on quickly and come up with better solutions”.
A number of insurance agencies have come to the same conclusion, preferring to hire “greenies” with no insurance sales background so they don’t have to undo previously acquired bad habits. However, while we rely on assessment tests and aptitude studies to help us filter out the best candidates, Chipotle has developed an exceptionally simple model. To aid managers in their selection process, Chipotle came up with a list of 13 traits they wanted every employee to have – things that would become obvious even during a relatively short meeting:
- High energy
- Infectiously enthusiastic
How unscientific, right? No psychological profiles. No personality quadrants. No predictive models. Just 13 seemingly vague “attributes”. On the other hand, who wouldn’t want each of their employees to mirror these traits?
One could argue that this is too subjective to be meaningful but Chipotle has an answer to that as well. They tested the effectiveness of this assessment method by interviewing a series of candidates for a few minutes on a stage in front of 2,000 managers at their annual managers meeting in Las Vegas. According to Moran, “there is 80% – 90% agreement on which candidates possess those characteristics”.
Once they get the right people on-board, the next step is to provide a clear career path so they won’t leave. Although the lowliest workers in the company – the crew – receive hourly pay that is consistent with other fast food restaurants, there is a very clear opportunity for them to move up to Kitchen Manager, Service Manager, and then Apprentice where the average annual compensation is $50,000. At Chipotle, advancement is not just an opportunity, it’s an expectation.
According to Moran, “the first thing I learned was that the manager is absolutely the most important person at the company. When I looked at how we trained and rewarded our managers, we didn’t treat them that way”. The company also realized that “promoting managers from within would create a feedback loop of better, more motivated employees”. In 2005 when they embarked on this new program “about 20% of their managers had been promoted from within. Last year, nearly 86% of salaried managers and 96% of hourly managers were the result of internal promotions”.
Those percentages sound incredible for an industry that is fraught with turnover and part time help.
Moran claims the single common element among their best performing stores was a manager who had risen up from crew. He claims to be able to identify a store that is well managed just by walking through the door. “I walk into a Chipotle and the first thing I do is take notes on how I feel. Is it fun, is it upbeat, is there camaraderie, is there pride? Enthusiasm? Is the place clean, does it sound and smell good? Is the line moving fast? Do the customers seem happy?”
Granted – there is a big difference between processing life insurance applications and churning out burritos, but we’ve all had a similar experience of walking into a business and encountering that same energetic vibe that Moran described. And why wouldn’t we want our customers to be left with a similar impression when they do business with our companies?
So how does Chipotle identify which of their employees are best suited for advancement? First off, Chipotle facilitates the feedback loop between workers and managers by letting workers identify the best potential mangers based upon recommendations from the staff at each location. However, the criteria for advancement are highly unusual and, according to Moran, the most important part of their strategy. “The foundation of our people culture, on which everything else stands, is the concept that each person at Chipotle will be rewarded based upon their ability to make the people around them better”. In this shocking shift in strategy, Chipotle is the only fast food restaurant that “ties pay and promotion to how you mentor people rather than store sales”.
On the surface, this seems so counter-intuitive. After all, shouldn’t sales and profits be the key metrics for any successful company? Imagine if our agencies measured the success of their agents by their mentoring ability? Would any sales even take place? Or what if our customer service representatives were promoted based primarily upon feedback from their peers? How many of us would feel confident that we were identifying the best people?
In response to these questions, one only has to look at Chipotle’s financial results – the company has achieved record growth by prioritizing mentoring. The company went public in 2006 when total sales were $826 million. Last year they were $3.2 billion. The company had 9.3% growth in comparable store sales last quarter and both Moran and investment analysts have linked this success directly to company culture.
On the one hand, Chipotle’s people culture differs dramatically from other fast food chains yet is undeniably successful. On the other hand, one of the keys for every company’s success is to find the right people and then train and retain them. Although Chipotle’s approach is unique, their priorities aren’t.
Who are the most important people at your company? What attributes do you value most? Do all of your people have a clear path for advancement or are they leaving for other opportunities? How much influence do your employees exercise in selecting their bosses? Can you identify a single factor that is responsible for the majority of your company’s success? Is it possible that the best way to maximize sales and profits is to prioritize elements that may seem completely unrelated?
Regardless of whether you find Chipotle’s approach to be applicable to your company, successful companies should all be at least be asking – and answering – questions like these. Otherwise, we risk having the question, “do you want a rider with that app” becoming the next catch phrase for a dead-end job.